Priming at the mouse mitochondrial origin of heavy-strand DNA replication is effected by transcripts from the light-strand promoter. The transition from RNA synthesis to DNA synthesis occurs at specific locations between 75 and 165 nucleotides downstream from the transcriptional initiation site. We have identified and partially purified an endonucleolytic activity that cleaves RNA accurately near one of these transition sites; this finding implies a role of specific RNA processing in DNA replication. Cleavage products possess 5'-phosphoryl and 3'-hydroxyl termini. Heterologous assays using mouse or human mitochondrial endoribonuclease with substrates containing the sequences of the human or mouse mitochondrial origins of heavy-strand DNA replication suggest that selection of the cleavage site is guided by sequences adjacent to the actual position of cleavage.